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Significant EAR Changes Will Further Restrict Exports to China, Russia, Others

Wednesday, April 29, 2020
Sandler, Travis & Rosenberg Trade Report

Exports to China, Russia, and certain other countries, particularly of goods in the high-technology, electronics, and telecommunications sectors, will be further restricted under new rules issued this week by the Bureau of Industry and Security. Clients and potential clients requiring support related to these changes should contact export attorney Kristine Pirnia.

Removal of License Exception CIV

Effective June 29, a BIS final rule will remove license exception CIV (civil end users) from the Export Administration Regulations. This exception authorizes exports, reexports, and transfers (in-country) of certain national security-controlled items without prior review by BIS to most civil end-uses in country group D:1 destinations, which currently include Armenia, Azerbaijan, Belarus, Cambodia, China, Georgia, Iraq, Kazakhstan, North Korea, Kyrgyzstan, Laos, Libya, Macau, Moldova. Mongolia, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Venezuela, Vietnam, and Yemen.

BIS states that it is removing this license exception due to concerns related to the increasing integration of civilian and military technology developments in these countries. As a result, effective June 29 BIS will require a license for exports of national security-controlled items on the Commerce Control List to D:1 countries.

In a related move, BIS is proposing to modify license exception APR (additional permissive reexports) to prohibit the use of this exception for reexports of items controlled for national security reasons on the CCL (1) to D:1 countries (2) from Hong Kong and country group A:1 countries, which currently include Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Italy, Japan, Latvia, Lithuania, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Luxembourg, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, and United Kingdom.

BIS is proposing this change because it has evidence of differences in licensing review standards under which A:1 countries may approve a license for the reexport of a U.S.-origin item that would have been denied if exported directly from the U.S. Comments on this proposed rule are due no later than June 29.

Expansion of Military End-Use/End-User Export Controls

Also effective June 29, a separate BIS final rule will expand license requirements on exports, reexports, and transfers (in-country) of items intended for military end-use or military end-users in China, Russia, or Venezuela. Specific changes include the following.

- expanding the licensing requirements for China to include military end-users in addition to military end-uses, which will require increased diligence with respect to the evaluation of end-users in China, particularly in view of China’s widespread civil-military integration

- broadening the list of items for which the military end-use and end-user licensing requirements and review policy apply to include a number of ECCNs in the categories of materials processing, electronics, telecommunications, information security, sensors and lasers, and propulsion

- expanding the definition of “military end-use” beyond items for the use, development, or production of military items to include items that support or contribute to the operation, installation, maintenance, repair, overhaul, refurbishing, development, or production of military items

- creating a new reason for control and the associated review policy for regional stability for certain items exported to China, Russia, or Venezuela

- requiring the filing of electronic export information for exports to China, Russia, and Venezuela regardless of the value of the shipment (unless eligible for license exception GOV)

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